* Fourth-quarter profit $0.09/share vs estimate of $0.11
* Revenue $1.28 bln, in line with estimates
* Expects 2013 capex of $800 mln-$900 mln
* Says confident shareholders will OK T-Mobile USA deal
Feb 26 MetroPCS Communications Inc's
quarterly net profit fell 65 percent and revenue growth slowed
for an eighth straight quarter as the wireless service provider
lost customers ahead of its proposed merger with Deutsche
Telekom AG unit T-Mobile USA.
MetroPCS shares edged lower in early afternoon trading after
the results on Tuesday, but investors focused mainly on whether
MetroPCS will be able to complete the T-Mobile USA deal, which
needs regulatory and shareholder approval.
The company, which is facing opposition from at least some
shareholders who are waging a proxy battle, told analysts on its
quarterly conference call that it is "highly confident" the
T-Mobile USA will be approved at its shareholder meeting on
March 28. Analysts expect regulators to give the deal their
MetroPCS said subscriber numbers on its older CDMA network
suffered while it focused on expanding its newer high-speed
wireless service based on Long Term Evolution technology. It
plans to phase out the older service after the deal with
T-Mobile USA, which is also betting its future on LTE.
Guggenheim Securities analyst Shing Yin said it made sense
for MetroPCS to operate as if the deal will be approved as he
believes that the odds it gets voted down is "pretty low."
"The results alone wouldn't cause shareholders to be more
positive or negative about the deal," Yin said.
On top of its technological strategy change, MetroPCS, which
serves cost-conscious consumers who pay for calls in advance,
also said it was facing increasing competition and economic
pressure. It announced in January that it lost a net 93,000
subscribers in the quarter.
The report comes a week after another prepaid service
provider, Leap Wireless, posted huge customer losses,
citing softness in the prepaid market and an increase in its
phone prices that drove some customers away..
But while MetroPCS also cited economic issues, executives
told analysts that its business might not be the best measure of
industry health because its weakness was largely due to strategy
Guggenheim's Yin said it was too soon to say whether this
was an indication of general weakness in the market, even though
the fourth quarter is usually strong for prepaid operators
because consumers shop for phones in the holiday season.
WEAK RESULTS/PROXY BATTLE
MetroPCS earnings fell to $31.7 million, or 9 cents per
share, in the quarter ended Dec. 31, from $91.3 million, or 25
cents per share, a year earlier.
Earnings per share fell short of Wall Street expectations
for 11 cents per share, according to Thomson Reuters I/B/E/S.
Revenue rose 4 percent to about $1.28 billion, in line with
MetroPCS said it expects its deal with T-Mobile USA to close
in early April.
It agreed in October to a reverse merger deal with T-Mobile
USA that would leave Deutsche Telekom with a 74 percent stake in
the combined company. Under terms of the deal, MetroPCS will
declare a 1-for-2 reverse stock split and pay $1.5 billion to
P. Schoenfeld Asset Management LP, an investment adviser to
shareholders holding about 2 percent of MetroPCS shares, has
said it intends to vote against the merger due to the deal
valuation and the high debt levels of the merged company. It is
leading a proxy battle against the deal.
Another shareholder, Paulson & Co, has also criticized the
terms of the deal but has yet to announce how it will vote.
MetroPCS said it expects capital expenditure of $800 million
to $900 million this year.
Shares of the company fell 5 cents, or 0.51 percent, to
$9.71 on the New York Stock Exchange early Tuesday afternoon.
The stock is almost 16 percent lower than it was before it
emerged that T-Mobile USA and MetroPCS were planning a deal.